European Union falls short on IMF loans goal

European Union falls short on IMF loans goal

BRUSSELS - Agence France-Presse
European Union falls short on IMF loans goal

International Monetary Fund's Managing Director Christine Lagarde. REUTERS

The European Union has fallen short of a target for loans to the International Monetary Fund (IMF) destined for a eurozone bailout, with Britain leaving its EU partners in the lurch for the second time this month.

Eurozone chief Jean-Claude Juncker said the 17 countries that share the single currency pledged 150 billion euros ($195 billion) in bilateral loans for the IMF late on Monday.

The European Union hopes the money can help stabilize the debt-hit euro area.

But EU leaders had called at a Dec. 9 summit for 200 billion euros, and Britain’s refusal to stump up its roughly 30-billion-euro share meant the results of a Monday night conference call auction left markets underwhelmed.

British hesitation

After mixed messages also from ECB chief Mario Draghi in a press interview and before a key European Parliament committee, Wall Street ended the day down 0.84 percent in thin trade.

“We will not contribute to anything that is only available to eurozone countries,” a British government official in London told AFP. “Nor will we participate in an increase in IMF resources that only comes from EU countries without the participation of other Group of 20 countries.”

The IMF currently has less than 300 billion euros available for lending to countries that enter reform programs.

Germany will provide 41.5 billion euros, France 31.4 billion, Italy 23.48 billion, Spain 14.86 billion, the Netherlands 13.86 billion and Belgium 9.99 billion.

Juncker said that Britain would “define its contribution early in the new year in the framework of the G20.”

But a senior EU official said finance minister George Osborne’s refusal to budge caused
“bitterness” among counterparts, on tenterhooks after being put on a downgrade watch by credit rating agencies.

One of the biggest, Fitch, has already warned that a meaningful solution to the debt crisis may prove “beyond reach” of the EU.

Conditional payout

The head of the German central bank said last week that its payout will be conditional on the United States and other major Group of 20 contributors taking a “fair” burden-share.

“If large members, for example the U.S., were to say ‘we’re not taking part,’ then from our point of view it is problematic,” he said.

Russia last week suggested that it could contribute up to $20 billion in loans and investments via the IMF. But China, India and Brazil have yet to go that far.

IMF chief Christine Lagarde said on Tuesday that the world economy is at “a very dangerous juncture.”
“Currently the world economy stands at a very dangerous juncture,” Lagarde told a roundtable on Africa’s economic future in the Nigerian city of Lagos yesterday.